RealTime IT News

Korea's Net Banking System Delayed, Near Breakup

Korea's proposed national Internet banking system, scheduled for launch next month, is expected to be delayed as Korea Telecom is technically ill-prepared, according to sources.

For this reason, the participating banks are now also considering to establish their own online banking system instead of the joint banking system, bringing the projected service to the verge of breakup.

Last month, Korea Telecom completed a security system for the banking service which is one of the core technologies required for the cyber banking system.

Still, many facets of the system remain incomplete and industry sources say that some errors in technologies, particularly solutions related to electronic wallet and data processing speed, were found.

"The launching of Internet banking service is expected to be delayed quite a while because some serious technical errors were found in the banking system developed by Korea Telecom," said an official of the Financial Supervisory Service (FSS). "So, test operation of the banking system has not been started yet."

Local banks, which have long been waiting for the launch of the platform, are disappointed with Korea Telecom's system and are studying way to create their independent online system.

Of the nine participating banks, Hanvit Bank, Kookmin Bank and Shinhan Bank have already decided to develop their own Internet banking system. Industry sources said that they have almost completed creation of their own online system and are ready to offer the service as soon as they obtain security approval from FSS.

Analysts said that one of the main reasons why the local banks prefer independent development of the Internet banking lies in the excessive amount of expenses shared by the participating banks for the development and operation of the joint banking system.

An industry source said that if local banks jointly use one Internet banking system, each of participating banks will not be able to bring their diversified services into relief.

"In this connection, they don't feel any more the need to participate in the joint banking system built by Korea Telecom at a time when they have to bear a large amount of allotments," he added.

Some of the banks left from Korea Telecom's joint online banking system are expected to launch their own Internet banking service in the next several months.